Baltic Dry Index. 848 -03 Brent Crude 46.92
“Men, it has been well said, think in herds; it will be seen
that they go mad in herds, while they only recover their senses slowly, one by
one.”
“Extraordinary Popular Delusions and the
Madness of Crowds.”
We open today with Trumpmania meets
Tulipmania, and both explore the “Extraordinary
Popular Delusions and the Madness of Crowds.” What could possibly go wrong?
Asia shares near two-year high as U.S. hi-tech rebound boosts mood
Japan's Nikkei rose more than 1 percent to a near two-year high on
Tuesday, encouraged by rebound in U.S. hi-tech shares as investors bet on solid
growth in the economy and corporate profits globally.
MSCI's broadest index of Asia-Pacific shares outside Japan held firm
near a two-year high struck last week, but was little changed on the day, with
gains in high-tech firms offset by a decline in Australian shares.
A big focus for Asia is whether index provider MSCI will later in the
global day open up its Emerging Markets Index to Chinese mainland shares which
have restricted access for foreign investors.
Many investors expect the so-called A shares that make up the majority
of China's stock market to likely be included after being rejected on three
previous occasions.
The blue-chip CSI300 index of mainland stocks was down 0.2 percent.
Wall Street's S&P 500 and the Dow industrial average hit record
highs as technology shares bounced back after some sudden falls earlier this
month.
"Hi-tech shares just went through a correction. Their valuation is
not that expensive, standing far below their levels at the peak of the dot-com
bubble in 2000. Given that their profits are expected to see exponential growth
in coming years, it is premature to say the rally in hi-tech shares is
over," said Mutsumi Kagawa, chief global strategist at Rakuten Securities.
U.S. financial shares also gained as U.S. debt yields rose after New York
Federal Reserve President William Dudley, a close ally of Fed Chair Janet
Yellen, said U.S. inflation should rebound alongside wages as the labour market
continues to improve.
The 10-year U.S. Treasuries yield edged up to 2.184 percent from a
seven-month low of 2.103 percent touched on Wednesday, following surprisingly
weak U.S. inflation data.
"Even though the Federal Reserve is about to shrink its balance
sheet, possibly as soon as in September, U.S. bond yields are kept at low
levels, which are very comfortable for stocks," said Norihiro Fujito,
senior investment analyst at Mitsubishi UFJ Morgan Stanley Securities.
More
Next, China seeks to become the world’s
dominant futures market of choice. In English, “terminal market” for any older
dinosaur traders like me. China aims to be the global commodity futures market
from soup to nuts. Nuts, sounds about right to me, without real rule of law,
and a multi-party, democratic state. What China’s communist party gives with
one hand, China’s communist party can take away with the other. Besides,
leading CEOs still have a habit of disappearing in today’s communist run China.
Something all too likely to start happening in GB, if the New Communist Labour
Party under Corbyn, ever comes to power.
From dates to power, China's exchanges rush for futures sweet spot
China's major commodity exchanges are scrambling to launch futures
contracts on a range of products - from dates to electricity - as they move to
tap investor risk appetite and offer the vast industrial complex ways to
protect revenue.
On Friday, executives from the top three exchanges - Zhengzhou Commodity
Exchange, Shanghai Futures Exchange and Dalian Commodity Exchange - reeled off
14 products from fruit to chemicals to power that they are studying as possible
candidates for new derivatives.
The race to introduce contracts, designed to help farmers, utilities and
steel mills protect against big price swings, comes as Beijing aims to be a
major hub for exchange-based trading and prepares to prise open long-closed
markets in the world's second-largest economy to foreign investors.
"The plans for futures such as dates, apple, anthracite (coal) fit
into China's plan to develop its real economy," said Liu Jin, director of
research at COFCO Futures.
"We are seeing market regulators decreasing the varieties of
financial futures and increasing the number of commodities futures."
A record 4.14 billion futures contracts traded last year, up 16 percent
from 2015, according to China Futures Association.
The moves will stir the debate over the role of speculators, who have
caused wild gyrations in everything from steel to eggs to corn in recent years,
as well as the heavy-handed intervention by regulators which may scare off some
players.
A variety of obscure futures contracts already traded in China, like
glass, silicomanganese, and bitumen, offer price discovery and a gauge on
industrial activity in the country.
Many of the contracts discussed on Friday have been in the works for a
while and complement existing domestic and international markets - SHFE's
long-awaited crude oil contract could be a serious contender on the global
market and Dalian has been looking at stainless steel and scrap contracts for a
year to expand its metals offering.
Anthracite would fit alongside Zhenzhou's thermal coal futures, which
have attracted more liquidity since its launch two years ago. China is the
world's top buyer of the fuel.
Others like red dates are niche, low in volume and unique to China -
dates are one of the nation's favorite fruits, a staple in tea and porridge and
considered crucial for health while cashmere, apples and silk point to China's
role as the world's top producer.
More
In Middle East news,
everyone seems to be choosing sides in the fight over Qatar’s natural gas. As
usual these days, the USA seems to be on both sides in this brewing fight.
Presumably, once US backed Saudi Arabia deposes the Qatari Royal Family and
controls the Qatari gas fields, the plan is to horizontally drill into the
Iranian half of the shared gas-field, provoking Iran to attack Qatar for
stealing their gas. Sound familiar? It’s what Kuwait did to Saddam Hussein’s Iraq
triggering the attack in 1991, after US Ambassador Glaspie and the US State
Department, gave Saddam Hussein the OK to invade Kuwait. It worked in 1991, why
not once again in 2017?
In a
now famous interview with the Iraqi leader, U.S. Ambassador April Glaspie told
Saddam, ‘[W]e have no opinion on the Arab-Arab conflicts, like your border
disagreement with Kuwait.’ The U.S. State Department had earlier told Saddam
that Washington had ‘no special defense or security commitments to Kuwait.’ The
United States may not have intended to give Iraq a green light, but that is
effectively what it did."
Turkish troops hold exercises in Qatar in show of support
Qatar held military exercises with Turkish troops on Monday,
demonstrating one of its few strong alliances after two weeks of ostracism and
economic isolation imposed by neighbours which accuse the U.S. ally of
supporting terrorism.
Qatar's state-funded pan-Arab news channel Al Jazeera showed footage of
a column of armoured personnel carriers moving through the streets.
It reported that additional Turkish troops had arrived in Qatar on
Sunday for the exercises, although military sources in the region told Reuters
the operation actually involved Turkish troops that were already present rather
than new arrivals.
Turkey is one of the few powerful countries in the Middle East to stand
squarely by Qatar after Saudi Arabia, Egypt and several other states proclaimed
it a supporter of terrorism and cut off all economic and diplomatic ties.
Qatar, the world's richest country per capita, has used its wealth over
the past decade to exert outsized influence in the Middle East, backing
factions in civil wars and revolts across the region.
It denies supporting terrorism and says it is being punished for straying
from its neighbours' political line of backing the region's authoritarian
hereditary and military rulers.
"The blockade has been ongoing for two weeks and the
blockading nations have offered no formula for resolving the crisis,"
Sheikh Saif Bin Ahmed al-Thani, Director of Qatar's Government Communications
Office, said in a statement on Monday.
More
In UK news, it’s
still all about Brexit and that needless, tragic fire, where the London Fire
Brigade unintentionally added to the death toll, by providing the disastrous
wrong advice to remain in the apartments.
We open with
Bloomberg’s editors still desperately pushing for a Brexit betrayal. What part
of democracy don’t the Great Vampire Squids and their mouthpieces understand?
A Plan for Brexit
How to avoid a chaotic
exit before the time for talks runs out.
by The Editors
19
June 2017, 07:25 GMT+1
With
the start of Brexit negotiations looming, the British government has only the
most tenuous grip on power. Amid paralyzing uncertainty, how can
the main actors -- Prime Minister Theresa May, opposition leader Jeremy Corbyn,
and government leaders across the European Union -- make their way forward?
The main thing is to agree to reach a deal of some kind before the U.K. officially leaves the EU on March 29, 2019. If this doesn’t happen, the result will be a chaotic exit that would be terribly damaging for the U.K. and pretty bad for the EU as well. It’s a needless risk. The way to avoid this so-called cliff-edge scenario it is to aim for a transitional accord that allows as much time as necessary to design a longer-term relationship.
Granted, achieving even this limited short-term deal won’t be easy. But it’s possible, and in some ways recent events may help.
May’s immediate problem is she has no majority in Parliament. To get the necessary legislation passed, she will need either to unite her bitterly divided party or gather cross-party support for her Brexit proposal.
At the moment, the latter looks more feasible. To that end, she should propose for Labour’s consideration a transitional arrangement, based on membership of the European Economic Area. This would allow membership of the EU’s single market, financial-services “passporting” and other valuable trade preferences, but it would also involve free migration to and from EU countries and leave the U.K. subject to EU lawmaking with next to no political representation.
That’s a constitutionally unattractive and indeed unthinkable long-term arrangement -- but workable as a short-term expedient, and vastly better than the cliff-edge. May could never unite her party around this idea: Hardline Tory euroskeptics would have a collective breakdown at the very thought. That’s where Corbyn comes in.
The Labour opposition could and should back a proposal along these lines. After all, it’s a variant of the softer Brexit members have been vaguely advocating -- an approach that prioritizes economic stability at the price of recovering less national sovereignty from the EU, especially over immigration. Corbyn could sell this as a win to his supporters, and it would be. May could grit her teeth and let that happen, emphasizing the need for national unity.
More
June 19, 2017 Updated
13 hours ago
British foam association joins call for study of deadly fire
London — The British Urethane Foam Manufacturers Association (BRUFMA) is backing
a call for a "full and proper investigation" into all the
circumstances of the recent Grenfell Tower fire in London which has so far
claimed 79 lives.
The fire happened late on June14 and into June 15 at a subsidized
apartment tower block in London. According to documents seen by Urethanes
Technology International, a sister publication of Plastics News,
material from Celotex designated Celotex FR 5000, was specified in a planning
note of 2012.
However, the firm said on its website that it has been contracted
to supply RS 5000 boards.
Simon Storer, chairman of BRUFMA, said "we know it [FR5000] was
specified originally, but whether it was used, where it was used and whether it
was used correctly are questions need to be answered as quickly as possible. We
all want to understand what happened for the sake of the residents, the sake of
the industry and everybody else involved."
Storer added that although the material is specified in the planning
note, "the work wasn't started until 2016, it's not unusual for product
replacement to occur because of changes in contractors."
He called for the investigation to establish "what other work had
been carried out, to what standard." as part of the public inquiry.
----A statement on Celotex website reads:
"With the rest of the nation our thoughts continue to be with those
affected by the terrible fire at Grenfell Tower in London. On Wednesday, as
soon as we were able to, we confirmed that our records showed a Celotex product
(RS5000) was purchased for use in refurbishing the building. We wanted to
provide an update to that statement and provide further information as we are
able to.
"It is important to state that Celotex manufacture rigid board
insulation only. We do not manufacture, supply or install cladding. Insulation
is one component in a rainscreen system, and is positioned in that system
behind the cladding material.
"As we previously stated, our records show a Celotex product
(RS5000) was purchased for use in refurbishing the building. This product has a
fire rating classification of Class 0, in accordance with British Standards.
Celotex RS5000 is the insulation component specifically tested as part of a
system to British Standard BS8414-2:2005. When the system is designed and
installed in line with this, RS5000 meets the criteria set out in BRE Report BR
135 'Fire performance of external thermal insulation for walls of multi story
buildings.'
"We will of course assist the relevant authorities fully with any
inquiries they have."
“In
reading The History of Nations, we find that, like individuals, they have their
whims and their peculiarities, their seasons of excitement and recklessness,
when they care not what they do. We find that whole communities suddenly fix
their minds upon one object and go mad in its pursuit; that millions of people
become simultaneously impressed with one delusion, and run after it, till their
attention is caught by some new folly more captivating than the first.”
Charles
Mackay, Extraordinary Popular Delusions and
the Madness of Crowds.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
The American Senate’s latest sanctions attack on Russia, from a
continental Europe perspective, looks more like an attack on Europe’s companies
and on Germany, Europe’s largest economy.
As with the earlier US sanctions on Russia, greatly supported by the UK,
the USA and UK have virtually nothing to lose by imposing sanctions on Russia,
it’s continental Europe that suffers from the imposition. As usual with imposed
sanctions, Russia just finds replacement goods and services, or expands its
domestic supply of whatever was sanctioned. With the EUSSR mired deep in a
little to no growth economy, continental Europe seems to have had enough of
paying for US imposed sanctions. The rift between America and continental
Europe is still widening.
Cold War Deja Vu Deepens as New Russia Sanctions Anger Europe
by Marc Champion
19 June 2017, 00:01 GMT+1
Russia on Sunday accused the U.S. of returning to “almost forgotten Cold War
rhetoric,” after President Donald Trump’s decision to reinstate some sanctions
on Cuba. It could have dropped “forgotten.”There’s been a lively debate among historians and diplomats for years over whether the souring of relations between the U.S. and Russia amounts to a new Cold War, and lately the case has been getting stronger by the day.
Trump’s restoration on Friday of some of the Cold War restrictions on Cuba his predecessor, Barack Obama, eased just months ago was only one example. Earlier in the week, the U.S. Senate approved a bill to entrench and toughen sanctions on Russia that includes several vivid flashbacks to before the fall of the Berlin wall.
German Chancellor Angela Merkel added her voice on Friday to rising European condemnation of a proposal in the Senate draft that would penalize companies investing in new Russian energy pipelines. Nord Stream 2, a project to double the supply of Russian natural gas to Germany via the Baltic Sea, would be especially vulnerable.
President Ronald Reagan used similar sanctions in an attempt to thwart the joint German-Soviet construction of a natural gas pipeline in the early 1980s, only to drop them amid intense opposition from Europe. Again, Germany led the pushback.
The Senate bill would also codify a raft of existing sanctions against Russia, so that Trump would need Congressional approval to lift them. That happened in 1974, too, and the measures proved hard to kill. The legislation wasn’t repealed until a decade after their target, the U.S.S.R., had ceased to exist.
The sense of Cold-War deja vu has been building for some time, according to Robert Legvold, a professor at Columbia University and author of “Return of the Cold War.” There’s a renewed arms race, nuclear saber rattling, the buzzing of ships and planes, proxy wars and disputes over whether missile defense systems count as offense or defense.
If the trend continues, said Legvold, it will prevent the strategic cooperation between the U.S. and Russia that’s needed to prevent approaching security challenges from spinning out of control: The rise of China, the race to exploit resources in the Arctic, international terrorism and, above all, a world with nine nuclear powers that’s more complex and unstable than in the 20th century.
“Nations, like
individuals, cannot become desperate gamblers with impunity. Punishment is sure
to overtake them sooner or later.”
Charles Mackay, Extraordinary Popular Delusions and the Madness of
Crowds.
Technology Update.
With events happening
fast in the development of solar power and graphene, I’ve added this section.
Updates as they get reported. Is converting sunlight to usable cheap AC or DC
energy mankind’s future from the 21st century onwards? DC? A quantum
computer next?
Cheap Solar Power Could Gut the Global Coal Industry by 2040
David Z.
Morris Jun 17, 2017
A new report concludes that solar energy will be a cheaper way
to generate electricity than coal in most parts of the world by 2021. That
crossover point, predicted to arrive much sooner than previously estimated,
could trigger a massive market shift that may drastically hamstring the coal
industry over subsequent decades.
According to the study, which was conducted by Bloomberg New Energy Finance, total coal generation in the
U.S. is estimated to be cut in half by 2040. In Europe, the predicted drop is
87%. Researchers project that coal generation projects equal to the entire
electricity output of Germany and Brazil stand to be cancelled.
Those drops are driven by more than the average price
of solar energy, which is expected to decline 66% between today and 2020.
The cost of wind generation is also expected to drop 47% during that time, with
offshore wind farms dropping 71%.
If the report’s projections pan out, global greenhouse gas
emissions could begin declining after 2026.
Renewable energy sources are not expected to entirely displace
coal. According to the report, natural gas-based generation is predicted to
grow by 16%. Gas, along with battery storage, is expected to play a fundamental
role in filling the gaps left by solar and wind generation, which are
considered "intermittent" energy sources because the sun isn't always
shining and the wind isn't always blowing.
More
The monthly Coppock Indicators finished May
DJIA: 21,009 +157 Up. NASDAQ: 6,199 +219 Up. SP500: 2,412 +161 Up.
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